Nexteer Automotive Group Limited · HKEX:1316
Nexteer Automotive — H1 2019 Earnings Presentation
38 slides from Nexteer Automotive's earnings presentation, Aug 13, 2019
Slide 1: 2019 Interim Results Announcement
2019 Interim Results Announcement 13 August 2019 Copyright 2019, Nexteer Automotive Corporation. All rights reserved. 1 CONFIDENTIAL
Slide 2: Safe Harbor Statement
Safe Harbor Statement These materials have been prepared by Nexteer Automotive Group Limited (“Nexteer” or the “Company”) and are being furnished to you solely for informational purposes. The information contained in these materials has not been independently verified. NO REPRESENTATION OR WARRANTY
Slide 3: 2019 1H Business Update
2019 1H Business Update Michael Richardson Executive Board Director President 3
Slide 4: Strategy for Profitable Growth
Strategy for Profitable Growth Expand Strengthen Capitalize on Optimize Cost Pursue Select Target China & Diversify Technology EPS as Enabler Structure Acquisitions & Emerging Revenue Base Leadership for ADAS & Alliances Markets A Well-Defined Plan to Drive Stakeholder Value 4
Slide 5: Enterprise Priorities: 2019 1H Execution Highlights
Enterprise Priorities 2019 1H Execution Highlights ▪ Successful launch of 21 programs across multiple product lines, regions & customers ▪ Increased Order-to-Delivery Backlog to US$25.6billion ▪ Continued Globalization with Regional Autonomy ▪ Improved Operational Efficiency ▪ Committed Investment o
Slide 6: Launch of 21 Customer Programs
Launch of 21 Customer Programs 2 10 9 ▪ GM GMC Sierra HD, ▪ PSA DS 3 Crossback SPEPS ▪ Mahindra XUV300 Driveline Chevrolet Silverado HD ▪ PSA Peugeot 208 SPEPS ▪ Tata Harrier Driveline; Pump HPS Gear; Pump; Driveline ▪ Nissan DAYZ Driveline ▪ Ford Lincoln Aviator ▪ Mitsubishi eK Wagon Driveline Colu
Slide 7: New Launch Vehicles
New Launch Vehicles PSA Chevrolet GMC Cadillac DS3 Crossback Silverado HD Sierra HD XT6 Tata Harrier Mahindra BYD Lincoln Peugeot XUV300 F3 Aviator 208 Nissan DAYZ Mitsubishi MG Chang’An Ford eK Wagon Hector CS35 Plus Explorer Q1 2019 Q2 2019 7
Slide 8: Enterprise Priorities: 2019 1H Execution Highlights
Enterprise Priorities 2019 1H Execution Highlights ▪ Successful launch of 21 programs across multiple product lines, regions & customers ▪ Increased Order-to-Delivery Backlog to US$25.6 billion ▪ Continued Globalization with Regional Autonomy ▪ Improved Operational Efficiency ▪ Committed Investment
Slide 9: Backlog Composition
Backlog Composition Order to Delivery Backlog* as of June 30, 2019 16% 25.6 26% 25.2 -1.8 +2.3 -0.2 10% 3% $25.6B $25.6B 53% EPS 71% CIS 21% N. America HPS Asia Pac. DL EMEA-SA $25.6B 35% Dec 31, 1H 2019 Gross New Adj. Jun 30, New Booking Composition 2018 Revenue Booking (Vol./FX) 2019 18% New / 12%
Slide 10: Backlog Trend
Backlog Trend 25.6 26.2 24.9 25.0 25.2 25.3 25.6 24.0 23.7 23.9 24.0 Dec. 31, Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30, 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 EPS CIS HPS DL 10
Slide 11: Enterprise Priorities: 2019 1H Execution Highlights
Enterprise Priorities 2019 1H Execution Highlights ▪ Successful launch of 21 programs across multiple product lines, regions & customers ▪ Increased Order-to-Delivery Backlog to US$25.6 billion ▪ Continued Globalization with Regional Autonomy ▪ Improved Operational Efficiency ▪ Committed Investment
Slide 12: Strategic Global Footprint Expansion
Strategic Global Footprint Expansion Wuhan, China EPS Manufacturing JV with Dongfeng In Construction Liu Zhou, China Self-owned New Facility Kenitra, Morocco In Production EPS & Driveline Manufacturing In Construction Bangalore, India Suzhou, China Software Center APAC Regional In Production Technic
Slide 13: Morocco Plant Grand Opening
Morocco Plant Grand Opening Booked Revenue Kenitra, Morocco In million USD EPS & Driveline 250 Manufacturing 200+ 200 150 100 Ground Breaking Grand Opening 50 March 2018 June 2019 0 2019 2020 2021 2022 2023 13
Slide 14: Liu Zhou New Plant Start of Production
Liu Zhou New Plant Start of Production Liu Zhou, China EPS 东风雷诺 Manufacturing ▪ Wholly-owned Facility Replacing the Previously Rented Plant ▪ Implemented “Smart Manufacturing” to Include Digital Trace™ Manufacturing Measure Ground Breaking Grand Opening December 2017 June 2019 ▪ Expanded Engineering
Slide 15: Globalization with Regional Autonomy
Globalization with Regional Autonomy Core Engineering Competency Globalisation - Global Aggregate* 70% 67% 63% 58% 53% 50% 2014 2015 2016 2017 2018 2019 * includes Applications Engineering and Continuous Improvement activities Regional Autonomy and Competency approaching 70% 15
Slide 16: Enterprise Priorities: 2019 1H Execution Highlights
Enterprise Priorities 2019 1H Execution Highlights ▪ Successful launch of 21 programs across multiple product lines, regions & customers ▪ Increased Order-to-Delivery Backlog to US$25.6 billion ▪ Continued Globalization with Regional Autonomy ▪ Improved Operational Efficiency ▪ Committed Investment
Slide 17: Saginaw Driveline Transformation
Saginaw Driveline Transformation Launch Where We’re Headed 2H 2018 2020 & Beyond ▪ Global consistency leading to better quality and customer value ▪ Reduced lead time across the supply chain and utilizing more supplier technology ▪ Improved efficiency in plant operations ▪ Improved capacity utilizat
Slide 18: Saginaw Driveline Transformation
Saginaw Driveline Transformation Manufacturing Process Staffing 10% 30% 45% Where We’re Headed 60% 2020 & Beyond 90% 70% 55% 40% 2018 2019 2020 2021 2018 2019 2020 2021 Mfg Source ▪ +3,900 part numbers impacted Floor Space Utilization (sq. ft.) ▪ +500 part numbers to be sourced ▪ +50 sequences of eq
Slide 19: Saginaw Driveline Transformation: A Proof-Point
Saginaw Driveline Transformation A Proof-Point Existing BOP New BOP Where We’re Headed 2020 & Beyond Improvement Manning 70% Std. Hours 36% Floor Space 63% Scrap/FTQ 83% 19
Slide 20: Industry Recognition
Ford’s “Silver Level SGMW’s “Excellent PSA’s “Platinum Manufacturing Award” Responding & Int’l Pioneer Supplier Status Certificate Awards” of Excellence” Industry for EPS Production at Nexteer Suzhou for Nexteer Asia Pacific for Nexteer EMEA & SA Recognition NAM’s “Manufacturing Moto Idea’s “Decade
Slide 21: Enterprise Priorities: 2019 1H Execution Highlights
Enterprise Priorities 2019 1H Execution Highlights ▪ Successful launch of 21 programs across multiple product lines, regions & customers ▪ Increased Order-to-Delivery Backlog to US$25.6 billion ▪ Continued Globalization with Regional Autonomy ▪ Improved Operational Efficiency ▪ Committed Investment
Slide 22: EPS Product Readiness on NEV Truck
EPS Product Readiness on NEV Truck Lead EPS Supplier on North America Full Size Truck and SUV EV’s o GM, Ford and FCA all planning Nexteer REPS o Nexteer holds 90% of the ICE and EV Truck market Well-positioned with developed technologies applicable to Truck EV’s o Up to 24 kN REPS loads (batter
Slide 23: Full Size Truck (FST) REPS Powerpacks
Full Size Truck (FST) REPS Powerpacks ~700 FIT ~400 FIT ~100 FIT ~10 FIT ~1 FIT ADAS Level 4-5 Fail Operational ADAS Level 3 Fail Safe ADAS Level 2 ADAS Level 1 Nexteer Launch LEGACY 3Q2018 3Q2022 2Q2020 3Q2021 Power Inverter SINGLE DUAL DUAL DUAL DUAL Micro SINGLE SINGLE DUAL DUAL DUAL Input Power
Slide 24: Automated Shuttle / Delivery Vehicles
Automated Shuttle / Delivery Vehicles ▪ Market Description – Autonomous vehicles used for first/last mile people transportation, and goods delivery – Speeds typically limited to 25 mph – Restricted and highly controlled routes – Intensified interest and investment ▪ Market Challenges – Inexperienced
Slide 25: Enterprise Priorities: 2019 1H Execution Highlights
Enterprise Priorities 2019 1H Execution Highlights ▪ Successful launch of 21 programs across multiple product lines, regions & customers ▪ Increased Order-to-Delivery Backlog to US$25.6billion ▪ Continued Globalization with Regional Autonomy ▪ Improved Operational Efficiency ▪ Committed Investment o
Slide 26: 1H 2019 Financial Highlights
1H 2019 Financial Highlights Bill Quigley Senior Vice President Chief Financial Officer 26
Slide 27: 1H 2019 Financial Highlights
1H 2019 Financial Highlights Financial Performance Impacted Largely by Environmental Factors 1. Currency headwind from USD strength against both RMB & Euro 2. Lower OEM production across all regions compared with 2018 3. Decline in China OEM production most impactful 4. GM NA K2 to T1 platform trans
Slide 28: Key Financial Metrics
Key Financial Metrics ($ in millions) Revenue EBITDA Net Profit* Free Cash Flow (% of revenue) (% of revenue) -10% -16% -34% -75% $2,047 $331 $183 $200 $1,832 $277 $131 16.2% 15.1% 9.8% 7.2% $45 1H 2018 1H 2019 1H 2018 1H 2019 1H 2018 1H 2019 1H 2018 1H 2019 * Net Profit Attributable to Equity Holde
Slide 29: Revenue Comparison
Revenue Comparison ($ in millions) Global Revenue Y-O-Y Revenue Drivers (structural %) $2,047 $2,047 $1,832 14% 14% ($40) 20% ($82) $1,832 17% ($84) ($9) 66% 69% ($215) 1H 2018 1H 2019 1H 2018 FX China NA All Other 1H 2019 Market CIS N. America Asia Pac. EMEASA FX, China Market and NA Columns Key Dr
Slide 30: Revenue by Region
Revenue by Region ($ in millions) Global Revenue Regional Distribution (structural %) (growth %) N. America Asia Pac. EMEASA $2,047 $1,832 14% $286 $1,343 $418 14% $1,275 $252 20% 17% ($68) ($20) ($20) $305 ($14) ($93) 66% 69% 1H 2018 1H 2019 1H 2018 V/P/O* 1H 2019 1H 2018 FX V/P/O* 1H 2019 1H 2018
Slide 31: Revenue by Product Line
Revenue by Product Line ($ in millions) Global Revenue Product Line Distribution (structural %) (growth %) EPS Columns Driveline HPS $2,047 -8% -20% -11% -16% 4% $1,832 15% 15% 4% 15% $1,321 $337 $304 $1,222 $85 17% $270 14% $269 $71 64% 67% 1H 2018 1H 2019 1H 2018 1H 2019 1H 2018 1H 2019 1H 2018 1H
Slide 32: EBITDA by Region
EBITDA by Region ($ in millions) N. America Asia Pac. EMEASA (% of revenue) (% of revenue) (% of revenue) 16.3% 21.0% 13.3% 14.8% $220 10.1% $88 $34 $189 19.5% $29 $60 1H 2018 1H 2019 1H 2018 1H 2019 1H 2018 1H 2019 32
Slide 33: Sequential Performance
Sequential Performance N. America Asia Pac. EMEASA (% of revenue) (% of revenue) (% of revenue) Revenue $1,282 $1,275 $363 $252 $305 $220 ($8) ($58) $32 2H 2018 1H 2019 2H 2018 1H 2019 2H 2018 1H 2019 EBITDA $34 $183 $189 $80 $29 $60 $6 ($20) $5 14.3% 14.8% 22.0% 19.5% 13.1% 13.3% 2H 2018 1H 2019 2H
Slide 34: EBITDA to Net Profit Walk
EBITDA to Net Profit Walk ($ in millions) 1H 2019 1H 2018 Change Commentary ▪ D&A reflecting program EBITDA $ 277 $ 331 $ (54) launches – engineering and D&A 117 91 (26) capital investment Net Finance Costs 2 6 4 ▪ Lower Net Finance Costs and Share of JV Earnings 2 2 - Income Tax Expense Income Tax
Slide 35: Investment for Future Growth
Investment for Future Growth ($ in millions) Engineering / Prod. Development* Cap-Ex* (% of revenue) (% of revenue) 7.8% 6.2% 4.6% 3.4% $144 $84 $127 $67 2018 2019 1H 2018 1H 2019 • Engineering and product development costs charged to income statement and development costs capitalized as intangible
Slide 36: Free Cash Flow and Balance Sheet
Free Cash Flow and Balance Sheet ($ in millions) Dec 2018 Dec 2018 1H 2019 1H 2019 Cash and Capital 1H 2018 1H 2019 Gross Debt $ 377 $ 338 Finance Leases $ 5 67 Less: Cash 675 585 Net Debt / (Cash) $ (293) $ (180) $140 Total Equity $ 1,710 $ 1,765 $195 Total Net Capital $ 1,417 $ 1,585 $240 Net Debt
Slide 37: 2019 Rest of Year Considerations
2019 Rest of Year Considerations 1. FX likely to remain a headwind 2. Seasonality in OEM production; maintain a cautionary view on China OEM production forecasts 3. Focused cost initiatives in place to mitigate soft OEM production environment 4. Substantial number of customer program launches - majo
Slide 38: Strategy for Profitable Growth
Strategy for Profitable Growth Expand Strengthen Capitalize on Optimize Cost Pursue Select Target China & Diversify Technology EPS as Enabler Structure Acquisitions & Emerging Revenue Base Leadership for ADAS & Alliances Market A Well-Defined Plan to Drive Stakeholder Value 38
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